Take a moment to view the video I've posted from "Your World" on Fox News. This is the mayor of Lansing, MI, answering questions about the UAW's president implying that people who are against the auto industry bailout are insane. Well, the head of the UAW is an idiot for saying that and I won't waste my time on him. But it was the mayor's comments that got me out of my seat near the end. See if you are as outraged as I am.
Did I hear the Mayor of Lansing correctly? Did he just say that in order to compete with foreign car manufacturers, we need to get rid of capitalist principles?!? Doesn't he realize that it is the removal of capitalist principles that is stifling the car manufacturers here in the States?!? During a conversation about how the auto industry has been losing market share for decades, the Mayor raises the issue of trade. Apparently he feels that the US manufacturers are at a disadvantage to people who have to pay to ship their products half way around the world! At one point, the Mayor asks the rhetorical question, "What happened in textiles, electronics, steel, and furniture?" I'll tell you what happened: THEY WERE UNIONIZED!!! Ever heard of Norma Rae?!? I'm all for humane treatment of workers, but when the unions start holding companies hostage for wages that aren't supported by the market, then who should be surprised by the companies going under?
At the very end of the conversation though is when I blew a gasket. Mayor Virg says that we are unilaterally disarming the American companies because we expect them to follow a capitalist rubric when the rest of the world does not have the same "restriction." With all due respect, your honor, if you think it is our capitalist system that is holding us back, you are clearly unaware of what's been happening to the American auto industry for 30 years or more. Allow me to enlighten you. For years now, we have mandated a variety of safety features, mileage standards, and emission standards, not to mention how the unions have been guaranteeing extensive pensions and higher wages than foreign companies do. These are not the hallmarks of a free-market capitalist business model. The free market would dictate whether or not certain safety features are included or not (thank you Ralph Nader). If people think that a safer car is worth more, then they will pay for it. If a job pays a certain amount of money, then that's what the job is worth. If the job only pays a small wage to hold down costs, then it is up to the workers to decided whether they want to work for that amount of money.
The fact of the matter is this: it was free-market capitalism which got the auto industries to be the great model of American achievement they have become and it will be free-market capitalism which will get them out of it. If the Mayor of Lansing, Michigan thinks that the free market is an albatross around the neck of the auto industry (and he apparently does), we have bigger problems than I thought. He is clearly not alone and it is the basis for much of this bailout talk we have been hearing for many months now. What we are experiencing now is not the FAILURE of the free-market system, it is an example of what happens when the free market is tampered with. Auto, housing, oil, have all had their industry tampered with by massive federal intervention. All for very noble causes I'm sure. But we are reaping now the seeds of intervention we have been sowing for more than 30 years. We can no longer artificially prop up an industry which has lost its way. It's time to let the auto companies go into bankruptcy, renegotiate their union contracts, and pay their people a wage more comparable to those auto workers in the southern states.
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I'm not entirely certain I disagree with the mayor. I also agree purely in theory with you. Confused? Good. My blog entry [ http://anamericanidiot.wordpress.com/2008/11/29/how-much-free-trade-is-free/ ] Was really talking about this same issue. In pure theory, free trade allows the market to determine who lives and who dies in the market. However, we are not just introducing competition in these free trade agreements. We are allowing competitors into our market without adjusting price for VERY different standards of living. Now if you believe the U.S. standard of living is far far too high and that we here in the U.S. should all be living without cars, TV's, or computers, and our homes should be made from mud or other low tech materials, then I see where you are coming from. I think Gore believes this way as long as he is exempt. Granted unions are demanding wages that exceed their labor output BUT what do you think is a fair competitive wage in the auto industry? Would $10/hr be fair? How about $5.75 that's roughly the same as your average high school student. I think they deserve more than $10 but to illustrate my point let's go as low as we can go. Would lowering every single auto worker's pay to minimum wage solve the problem? No. The average Chinese factory worker makes $2.20 an hour [ http://www.payscale.com/research/CN/Country=China/Hourly_Rate ]. Furthermore current trade agreements allow the Koreans to continue import taxes on U.S. products while Korean imports to the U.S. go tax or nearly tax-free. It is not capitalism that has failed it is the tariff system that has been changed to benefit third world producers while exterminating American producers. As I mentioned in my essay on this topic, we need to have equalizing tariffs or demand foreign workers make salaries that are roughly equivalent to U.S. workers. This would mean higher prices and thus no one would desire this. But should something not be done to equalize trade we will slowly spiral into a world where the standard of living reaches a global median. Where those who are able to own a business populate the upper and the remnants of the middle-class while the rest of the world languishes in the realm of the working poor. Then you can truly kiss capitalism goodbye. A poor democracy will vote itself right into a communist dictatorship. We got a taste of just how little people think when they are scared last month. I think union concessions are needed but so is a little protectionism to level the field. You are true to the theory but sometimes there are reasons to stray from a good theory.
Oh, I forgot to complement the new look. Much nicer.
OK, I went back and watched this again and I have to admit I tuned this interview out early the first time I watched it. I see Reed was really responding to the dumbass comment the Mayor made toward the very end. He then says capitalism doesn't work and that the rest of the world is NOT capitalist. OK, I disagree with all of that and think the mayor's leftism is shining through. Capitalism works but competing with countries that have workers willing to live in shacks and work for scraps doesn't.
OK, I went back and watched this again and I have to admit I tuned this interview out early the first time I watched it. I see Reed was really responding to the dumbass comment the Mayor made toward the very end. He then says capitalism doesn't work and that the rest of the world is NOT capitalist. OK, I disagree with all of that and think the mayor's leftism is shining through. Capitalism works but competing with countries that have workers willing to live in shacks and work for scraps doesn't.
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